After fraudulently creating millions of accounts and products to customers under false pretenses or without consent for more than a decade, Wells Fargo recently agreed to pay $3 billion to resolve the bank’s potential criminal and civil liability.
Between 2002 and 2016, Wells Fargo executives implemented policies designed to pressure their employees to meet unrealistic sales goals. In fear of losing their jobs, employees systematically falsified bank records and committed identity theft in order to open checking and savings, debit card, credit card, bill pay, and global remittance accounts under their customers’ names, but without their knowledge or consent.
The top managers were aware of the unlawful and unethical gaming practices as early as 2002, and they knew that the conduct was increasing due to onerous sales goals and pressure from management to meet these goals. One internal investigator in 2004 called the problem a “growing plague.” The following year, another internal investigator said the problem was “spiraling out of control.”
On Friday, Wells Fargo, the nation’s fourth-largest bank, agreed to pay the $3 billion fine to settle a civil lawsuit and resolve a criminal prosecution filed by the Justice Department. As part of the agreements with the United States Attorney’s Offices for the Central District of California and the Western District of North Carolina, the Commercial Litigation Branch of the Civil Division, and the Securities and Exchange Commission, Wells Fargo admitted that it collected millions of dollars in fees and interest to which the Company was not entitled, harmed the credit ratings of certain customers, and unlawfully misused customers’ sensitive personal information, including customers’ means of identification.
“When companies cheat to compete, they harm customers and other competitors,” stated Deputy Assistant Attorney General Michael Granston of the Department of Justice’s Civil Division. “This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope, and for its blatant disregard of customer’s private information.”
“Our settlement with Wells Fargo, and the $3 billion monetary penalty imposed on the bank, go far beyond ‘the cost of doing business.’ They are appropriate given the staggering size, scope and duration of Wells Fargo’s illicit conduct, which spanned well over a decade,” said U.S. Attorney Andrew Murray for the Western District of North Carolina on Friday. “When a reputable institution like Wells Fargo caves to the pernicious forces of greed, and puts its own interests ahead of those of the customers it claims to serve, my office will not sit idle. Today’s announcement should serve as a stark reminder that no institution is too big, too powerful, or too well-known to be held accountable and face enforcement action for its wrongdoings.”
“This case illustrates a complete failure of leadership at multiple levels within the Bank. Simply put, Wells Fargo traded its hard-earned reputation for short-term profits, and harmed untold numbers of customers along the way,” observed U.S. Attorney Nick Hanna for the Central District of California. “We are hopeful that this $3 billion penalty, along with the personnel and structural changes at the Bank, will ensure that such conduct will not reoccur.”